Builder confidence in the market for newly built single-family homes inched up by one point to 38 in March, following a revised upward one-point revision in February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Any HMI reading over 50 indicates that more builders view conditions as good than poor. This month’s index data was recorded after the conflict with Iran started.
The latest HMI survey found 37% of builders cut their prices in March, up slightly from 36% in February. The average price reduction remained stable at 6%. The use of sales incentives was 64% in March, down one percentage point from February. This marked the 12th consecutive month this share has exceeded 60%.
“Affordability for buyers and builders remains a top concern,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
All three of the major HMI indices posted gains in March. The HMI index gauging current sales conditions increased one point to 42 from February to March, the index measuring future sales gained two points to 49 and the index charting traffic of prospective buyers posted a three-point increase to 25.
Looking at the three-month moving averages for regional HMI scores, the Northeast held steady at 44, the Midwest was unchanged at 43, the South held constant at 35 and the West fell two points to 31.
“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward,” said NAHB Chief Economist Robert Dietz. “The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.”
